Following Monday's massive selloff, stocks rebounded Tuesday as China's central bank signaled it wouldn't allow the yuan to dip further as the trade war has escalated.

As of 10:40 a.m. ET, the Dow gained 128.72 points, or 0.50%, while the S&P 500 gained 23.05 points, or 0.81%, and the Nasdaq Composite grew 88.97 points, or 1.15%.

The market seemed to lose some steam after opening at stronger gains. 

Indexes have been on the decline in recent days since President Trump announced new tariffs on Chinese goods. 

"Clearly, markets have stabilized a bit," Tim Anderson of TJM Investments told Yahoo! Finance.

Anderson noted China's bank set the offshore yuan above seven against the greenback. He also said that he expects more volatility going forward. 

Meanwhile, White House economic advisor Larry Kudlow told CNBC that the U.S. economy gives the U.S. an advantage in the tariff battle. 

"The Chinese economy is crumbling. It’s just not the powerhouse it was 20 years ago," Kudlow said.